Weed, California and Lessons to be Learned

The Bulwark published California’s Billion-Dollar Weed Boondoggle, and although I think Indiana should legalize, there may be lessons to be learned here.

Here might one thing to avoid:

 For the past five years, furious residents of Santa Barbara County have waged a battle against a unilateral decision by supervisors to turn the county into the largest marijuana “grow site” in the state, likely the nation. The decision has been bitterly opposed, sued over, protested, and appealed by the county’s residents, city officials, schools, and traditional agriculture concerns—the producers of wine, avocados, citrus, vegetables. (Full disclosure: My husband and I live in Santa Barbara County—downwind from some of the grows—and have backed grassroots groups fighting for basic acreage limits and odor enforcement.)

And so might this:

But no one voted for the installation of industrial-sized massive grows of marijuana in vented greenhouses or open fields with no mandatory odor and air-quality controls, no acreage or license limits—and enforcement at about zip.

Did I mention that cannabis is a failing business? California growers claim their marijuana operations are hemorrhaging revenue despite every known carrot and concession from the state. Sacramento even recently suspended state cultivation taxes—something that California, projecting a $22.5 billion deficit this fiscal year, can ill afford. Yet with wholesale cannabis prices falling, according to SFGATE, by as much as 95 percent since 2016, many smaller producers have been forced out.

All of which is to say, California’s weed boondoggle arises from the inevitable woe of ignoring supply and demand economics. The state’s decision to greenlight massive amounts of cannabis glutted the market at three to five times demand, driving down prices. At the same time, it catalyzed a huge illegal market that has outperformed the legal market by two or three times. Many growers simply sell to the black market, thus making the state an unwitting partner in crime, though no one in Sacramento has any illusions as to what is happening.

But, and it is a big but, what if there were interstate trade in marijuana? Wouldn't then the overproduction find other markets? Which means those states who wait for federal law to legalize pot may well find themselves outside the market as producers, only buyers. This seems a good reason to create Indiana producers now, and to make sure they can withstand the onslaught of out-of-state producers. Else we will have the situation when Indiana allowed cross-county banking only to find our banks bought up by banks from Ohio and elsewhere.

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